Dangote, Others Report N1.18trn Revenue, N270.9bn Profit in H1 2022

FG Must Curb Monopoly In Cement Industry

Following increased demand driven by infrastructure expansion in Africa, three cement manufacturing businesses listed on the Nigerian Exchange Limited (NGX) have declared N1.18 trillion in sales, translating into an overall profit gain of N270.9 billion in the half year (H1) ending June 30, 2022.

According to an examination of the three firms’ H1 unaudited accounts for the period under review, sales increased by 23.3 percent to N1.18 trillion from N959.84 billion recorded in the Half year ended June 30, 2021.

Dangote Cement maintained its revenue lead in H1 2022, with about 14,206,000 tonnes sold compared to 15,277,000 tonnes in H1 2021, followed by BUA Cement and Lafarge Africa Plc.

Dangote Cement reported N808.04 billion in sales in H1 2022, a 17 percent rise from N690.5 billion in H1 2021. BUA Cement, for its part, reported revenue of N188.56 billion in H1 2022, a 51.7 percent increase over the N124.3 billion reported in H1 2021.

In addition, Lafarge Africa reported N186.6 billion in sales in H1 2022, up from N146.02 billion in H1 2021, a 29% increase.

Dangote Cement is Africa’s leading cement producer, with nearly 51.6 million metric tonnes/pa capacity across Africa, followed by BUA Cement, the largest cement producer in the North-West, South-South, and South-East regions, with a combined installed capacity of 11 million metric tonnes/pa and plans to expand existing capacity.

Lafarge Africa has a current installed cement production capacity of 10.5 metric tonnes/pa and its cement operations in the South West (Ewekoro and Sagamu in Ogun State), North East (Ashaka, in Gombe State), South East (Mfamosing, Cross Rivers State) with Ready-Mix operations in Lagos, Abuja and Port Harcourt.

Analysts explained that a marginal increase in prices of Cement this year impacted positively revenue that eventually boosts profit.

The retail price of a 50kg bag of Dangote cement was sold between N3,900-N4,200, while BUA Cement and Elephant Cement produced by Lafarge Cement are sold for N3,800- N4,000 respectively.

The mounting cost of production due to inflationary pressure, among others, reduced profit, leading to a decline in profit declared by Dangote Cement.

Specifically, Dangote Cement reported a 16.8 per cent increase in the cost of sales to N322.46 billion in H1 2022 from N276.12 billion in H1 2021, driven primarily by a 31.3 per cent hike in fuel & power consumed that closed H1 2022 at N129.96 billion from N98.98 billion in H1 2021.

The leading cement company also suffered N40.66billion foreign exchange loss in H1 2022 from N4.94billion reported in H1 2021, attributable to dwindling Naira in the foreign exchange market.

For BUA Cement, its production cost rose by 47.4 per cent to N97.5 billion in H1 2022 from N66.16 billion in H1 2021, while Lafarge Africa announced N90.52billion in production cost of sales in H1 2022, representing an increase of 25 per cent from N72.54billion reported in H1 2021.

The Chief Executive Officer of Dangote Cement, Michel Puchercos, in a statement explained that a significant increase in energy and Automotive Gas Oil (Diesel), is impacting negatively on the production and supply of cement products.

He stated that the volatile international context is strengthening efforts to ramp up the usage of alternative fuels and execution of an export-to-import strategy. The company according to him is reducing dependence on imported inputs and making the local markets self-sufficient.

As a result of an increase in production cost and finance expenses, Dangote Cement closed H1 2022 with a profit of N172.1billion, representing a decline of 10.2 per cent from N191.63billion in H1 2021.

Contrarily, BUA Cement grew its profit by 41.4 percent to N61.36 billion in H1 2022 from N43.4 billion in H1 2021, while Lafarge Africa announced a N37.4 billion profit in H1 2022 from N28.32 billion reported in H1 2021.

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